BSP Targets the Unbanked with the Basic Deposit Accounts

The Monetary Board approved a new Circular setting out the framework for banks to offer a basic deposit account to promote account ownership among the unbanked.

Ownership of an account provides Filipinos the tool to save and transact money in a safe, convenient and affordable manner. It can unlock access to a wider range of financial services to meet their various needs, including credit, insurance and investments. However, the World Bank Global Findex (2014) estimates that only 31.3% of Filipino adults have formal accounts. The usual barriers include costs, lack of money, lack of documentary requirements, and perceived low utility of a bank account, among others.

The basic deposit account framework addresses these observed barriers. The minimum key features of the account include: simplified know-your-customer (KYC) requirements; an opening amount of less than PhP 100; no minimum maintaining balance; and no dormancy charges. To prevent misuse of the basic deposit account, its maximum balance is set at PhP 50,000. These features meet the need of the unbanked for a low-cost, no-frills deposit account which they can open even if they do not have the standard identification documents.

As an incentive for banks, the basic deposit account is granted a preferential 0% reserve requirement which lowers their account maintenance cost. This regulatory incentive does not apply to regular bank accounts even if their balances fall below PhP 50,000.

Banks can customize their basic deposit account product to serve wider markets and harness technological innovations in client onboarding and servicing of the account, provided the necessary controls are in place and the specified minimum key features are strictly observed.

The basic deposit account supports the implementation of the National Retail Payments System (NRPS) that aims to increase adoption of digital payments in the country. By having a transactional account, the previously unbanked will be able to participate in the digital finance ecosystem and benefit from electronic fund transfers for their remittance and payment needs.

The BSP expects that the basic deposit account will provide the much needed boost in expanding formal account ownership and usage in the country, particularly among the unserved low-income markets.